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Glossary of terms

Updated 15 December 2023

These terms are defined for the purpose of their use within these guidelines. This will help you understand how they relate to terms used in business, and in the relevant legislation.

Terms A to E

Agency or Agencies                          

For the purpose of these guidelines, agency and agencies are the collective terms that refer to an organisation which supplies workers to clients.  

Blanket Determination 

A blanket determination is where a determination is made for a group of workers who have different terms and conditions or working practices, and their individual circumstances have not been considered.

Client                                

The organisation to which a worker is supplying their services. Also sometimes known as an engager, or end client in receipt of the worker’s services.

Contracted out services                            

A contracted out service is where a client organisation has entered into a contract with a third party, often known as a service provider, to effectively manage certain elements of the organisation’s activities.

Deemed direct payment                          

The payment which is to be treated as earnings from an employment, when the client has determined that the off-payroll working rules apply to that engagement. Read more information in HMRC internal manual ESM10028.

Deemed employee        

An individual worker who supplies their services to a client through their own intermediary, and the client has determined that the off-payroll working rules apply to that engagement.

Deemed employer         

The organisation responsible for operating PAYE for workers who have been deemed as employed for tax purposes by their client. This could be a client or an employment agency in the chain. This is normally the same person as the fee-payer, but it may be another person in the contractual chain if the fee-payer is not a qualifying person. Read more information in HMRC internal manual ESM10017.

Terms F to J

Fee payer                        

The organisation in the contractual chain who sits immediately above the worker’s intermediary. Read more information in HMRC internal manual ESM10017. 

Hiring manager              

The individual in an organisation that requires the services of the worker, sometimes known as the vacancy holder. The hiring manager will usually be the closest link between client and worker, and often be in the worker’s line management chain.

Inside the off-payroll working rules or Inside IR35                                 

A client has determined that the off-payroll worker would be an employee or office holder for tax and National Insurance contributions purposes, if they were directly engaged by them. These workers are deemed employees and are subject to PAYE on any remuneration for the engagement. Sometimes referred to as ‘off-payroll working rules apply’ or ‘inside IR35’.

Terms K to O

Labour supply chain      

The chain of organisations contracting with one another, which the chain payment flows through. It starts with the organisation in receipt of the worker’s services (the client), and ends with the worker’s intermediary. Also known as the contractual chain.

Large clients

Read ‘Medium and large clients’ for more information.

Managed service           

For the purposes of these guidelines, managed service has the same definition as contracted out service.

Medium and large clients                              

Private sector companies and voluntary sector organisations are considered medium and large-sized, if they meet 2 or more of the following conditions:

• have an annual turnover of more than £10.2 million
• have a balance sheet total of more than £5.1 million
• have more than 50 employees

There is a simplified test if you meet certain conditions. Get more information about determining the size of your organisation for off-payroll working purpose.

Off-payroll worker        

The individual personally providing their services to a client through their own intermediary. Sometimes referred to as a contractor.

Off-payroll working rules apply                      

A client has determined that the worker would be an employee or office holder for tax and National Insurance contributions purposes, if they were directly engaged by them. These workers are deemed employees and are subject to PAYE on any remuneration for the engagement. Sometimes referred to as ‘inside the off-payroll working rules’ or ‘inside IR35’.

Off-payroll working rules do not apply          

A client has determined that the worker would be self-employed for tax and National Insurance contributions purposes, if they were directly engaged by them. These workers are not deemed employees, and any remuneration for the engagement should be paid gross to the worker’s intermediary. Sometimes referred to as ‘outside the off-payroll working rules’ or ‘outside IR35’.

Organisations                 

A collective term in these guidelines to refer to both clients and deemed employers.

Outside scope of the off-payroll working rules                                 

An engagement will be outside the scope of the off-payroll working rules if the client is small, or the worker does not provide their services through their own intermediary. If a client decides that an engagement is outside scope, they will have no further client responsibilities for that engagement.

Outside the off-payroll working rules or Outside IR35

A client has determined that the worker would be self-employed for tax and National Insurance contributions purposes, if they were directly engaged by them. These workers are not deemed employees, and any remuneration for the engagement should be paid gross to the worker’s intermediary. Sometimes referred to as ‘off-payroll working rules do not apply’ or ‘outside IR35’.

Terms P to T

Personal service company (PSC)               

A PSC is not defined by law, but typically is a limited company which a worker provides their services through, and also:

• controls
• has a financial interest in

For the purposes of these guidelines, Personal service company (PSC) means any intermediary which meets the conditions set out in HMRC internal manual ESM10003.

Procurement teams      

A dedicated recruitment team that works alongside, or in place of hiring managers, to recruit workers, including off-payroll workers.

Reasonable care             

Acting in a way that would be expected of a prudent and reasonable person, in the client’s position.

Role based determination                

An acceptable determination for a group of off-payroll workers, who are engaged under the same contractual terms and conditions, and work in practice under the same terms and conditions.

Small business

A small business, for the purposes of the off-payroll working rules, is a                          business that does not meet the qualifying conditions to be determined a large or medium sized business. Read ‘Medium and large clients’ for more information.

Statement of work         

Statement of work defines the activities that will be conducted by an individual or organisation, and the outputs or deliverables expected at the end of a contract.

Status determination statement             

A statement made by the client, to explain whether or not the off-payroll working rules apply to an engagement. Read HMRC internal manual ESM10012 for more information.

Terms U to Z

Umbrella company       

There is no statutory definition of an ‘umbrella company’. However, it is generally accepted that an umbrella company is a company that employs temporary workers, who work for different clients. Umbrella companies do not source work.

Vacancy holder              

Read ‘hiring manager’.

Within scope of the off-payroll working rules                                 

An engagement is within scope of off-payroll working rules, if both of these conditions are met:

• the client is a public authority, a medium or large-sized private sector company, or a voluntary sector organisation
• the worker provides their services to the client through their own intermediary, usually a personal service company (Read HMRC internal manual ESM10003 for detailed guidance on qualifying intermediaries)

Worker                            

For the purposes of these guidelines, worker has the same definition as off-payroll worker.